Volume No. 2 Issue No. 31 - Monday March 10, 2008
Caribbean debates benefits of links with Venezuela
 By Canute James for the Financial Times
Venezuela's President Hugo Chavez reviews his presidential guard soldiers at a welcoming ceremony for Dominica's Prime Minister Roosevelt Skerrit, unseen, at Miraflores presidential palace in Caracas, Thursday, Jan. 10, 2008.(AP Photo/Fernando Llano).
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Prime minister Roosevelt Skerrit has taken his eastern Caribbean island of Dominica into a controversial Venezuelan commercial agreement and has awakened latent concerns among his Caribbean colleagues over the region's economic ties.
Mr Skerrit has made his country of 70,000 people a member of Venezuelan president Hugo Chávez's Bolivarian Alternative for the Americas (Alba). Mr Chávez is proposing Alba as a response to the hemispheric Free Trade Area of the Americas that is being pushed by the US.
Mr Skerrit says Alba will help his country's agriculture-based economy. "We have to be proactive and we see Alba as an opportunity for us to create a level of economic sovereignty and independence."
But others do not agree. Trinidad and Tobago's prime minister, Patrick Manning, says that Alba will not benefit the Caribbean and that he is committed to the FTAA. "We have convinced our Caribbean colleagues to make Trinidad and Tobago the FTAA headquarters. How in the face of that could we now go and sign an agreement that scuttles the FTAA?"
Mr Chávez's critics claim that he is offering help to his small and mainly poor Caribbean neighbours in order to improve his diplomatic stock in an ideological battle with Washington. Besides Venezuela and Dominica, other Alba members are Cuba, Bolivia and Nicaragua.
At the centre of Mr Chávez's Caribbean initiative is the PetroCaribe energy facility. PDVSA, Venezuela's state-owned energy company, is supplying several Caribbean countries with just under 200,000 barrels a day of oil and petroleum products under preferential payment terms.
The agreement allows the recipients to finance one-third of their oil imports for 15 years at an interest rate of 2 per cent per year. When the price of oil goes above $50 (€33, $25) a barrel, the interest rate will fall to 1 per cent a year, with 40 per cent of the imports being financed for 25 years.
Most Caribbean countries have signed up, including Cuba, the Dominican Republic, Haiti and Jamaica, and several others in the eastern Caribbean.
Cuba's PetroCaribe agreement has been extended to allow Venezuelan participation in the completion and commissioning of an oil refinery that was mothballed for 17 years as well as the construction of several energy facilities.
Jamaica has used PetroCaribe loans for housing and for supporting the state-owned airline, public transport and the struggling sugar industry. It has also used them for infrastructure work, including roads and bridges. The agreement has been extended to include PDVSA's equity participation in the island's only oil refinery.
Venezuela will allow commodities to be bartered for PetroCaribe oil. The Dominican Republic will counter-trade eggs and chickens while using the loans to help pay a subsidy to its troubled electricity sector.
Mr Manning had earlier rejected PetroCaribe, saying it would cost his energy-exporting economy its $600m-a-year regional market. Barbados has not agreed to PetroCaribe, says Chris Sinckler, foreign minister. But the government is less definitive about Alba. David Thompson, the prime minister, says the "advantages and disadvantages" will be examined.
"When looking at Alba and the FTAA, we must not compare apples and oranges," said Ralph Gonsalves, St Vincent's prime minister. "When the FTAA was proposed in the 1990s, it was intended to be a comprehensive agreement, not just a trade agreement. But because of free-trade ideologues in one or two capitals, the FTAA took a narrow free-trade focus that made some governments unhappy." In spite of this, he was not ready to sign the Alba pact, he said.
Keith Mitchell, prime minister of Grenada, is cautious about Alba. "In dealing with a new relationship of this nature we should discuss it first regionally to ensure it does not affect previous commitments that we have."
The debate about Venezuela's economic and diplomatic thrust has been influenced by unresolved issues between Caracas and some countries.
Trinidad says it has been waiting for almost a year for Venezuela to sign an agreement in principle to share extensive oil and gas deposits that straddle their maritime border.
There is a dispute between Venezuela and several eastern Caribbean islands over the ownership of the small Isla de Aves (Bird Island), which the islands' governments say sits above substantial oil and gas deposits. But this has not deterred these governments from agreeing PetroCaribe terms.
Some of Mr Skerrit's critics consider his decision to join Alba as influenced by Venezuela's provision of $140m to Dominica for a range of projects, including an oil refinery, sea and river defence infrastructure, agriculture, housing, small business development and national security. Mr Skerrit says he is delaying the construction of the refinery be-cause of concern about its impact on the environment.
He is unmoved by the debate over his decision. "Alba is a reflection of the government's proactive foreign policy to promote growth and employment, and to reduce poverty. Quite simply, this is what Alba represents for us."
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